KFC is getting into home delivery in Australia

KFC will launch a home delivery trial next month with Foodora as the fried chicken business looks for new ways to reach its customers.

Managing director Nikki Lawson revealed to Business Insider that the trial will begin in the next two to three weeks, starting a store in the Sydney beachside suburb of Manly, with up to 12 stores involved.

Lawson said the full list of trial stores is not yet finalised, but will be based around Foodora’s strongest delivery areas.

“You’ve got to work out what’s our trade zone versus what’s the delivery company’s trade zone and how those dovetail together,” she said.

“You don’t want to annoy consumers who sit in the dark spots in between, or you don’t want to end up delivering a product where you can’t guarantee their freshness.”

South African-born Lawson, who’s spent 17 years with the company, was appointed KFC’s South Pacific managing director in October last year, having spent the previous seven years in Australia as the brand’s chief marketing officer.

The home delivery plan is a back-to-the-future moment for KFC, which previously offered delivery 20 years ago. The company already has testing underway in New Zealand with New Zealand Post.

But the rise of gig economy brands such as Berlin-based Foodora, Deliveroo, MenuLog and UberEats has opened up new opportunities food outlets from top end restaurants to fast food chains and Lawson believes it’s only the beginning as Amazon prepares to launch in Australia.

“Amazon might change that for us. The whole Australian delivery landscape could be changing, which will open up different opportunities,” she said.

“If consumers want it you’ve got to give it to them in the formats they want.”

But while consumers are spoilt for options and digital disruption is driving down costs, Lawson says KFC can see that its customers are feeling the economic pain.

“Consumer incomes are under pressure and the need for what we call ‘easy’ is more important than ever,” she said.

“The consumer wants it easier, they want great value and they want you to do it in a way they can trust you.”

But with the brand set to celebrate 50 years in Australia next year, KFC is also facing challenges as rival roast chicken chain Red Rooster ramps up its home delivery service, launched two years ago, when CEO Chris Green joined the company after 30 years with McDonald’s.

The company now has 400 delivery cars and runs the service through MenuLog. Home delivery is now in 240 stores – around two-thirds of the national total – and Green called it the company’s “silver bullet” that now accounts for up to 30% of revenue in some stores.

Like pizza company Domino’s, which has emphasised technology as a key selling point, KFC is also trying to engage consumers via its app.

“The KFC Express app is a big one for us,” Lawson said.

While KFC is well positioned as a fast and low-cost dining option – Lawson says the company is also looking to roll out a refresh of its in-store decor – the question is whether its customers are willing to spend the extra money for the convenience of home delivery.

“The balance is there’s a certain cost involved and whether the Australian consumer has the appetite for that, because you’ve got to have a have a healthy financial model,” she said.